Women’s clothing brand Roman Originals has been inundated by calls since the photo became the center of an online debate.
The company led a funding round that raised about $133.8 million for Indian online marketplace Snapdeal. EBay had previously invested $50 million in the e-marketplace. The news comes days after an eBay acquisition and amid an ongoing feud with shareholder Carl Icahn.
EBay Inc. has led a funding round that has pumped about $133.8 million into India-based online marketplace Snapdeal.com. The news comes amid a busy week for the U.S.-based firm, which also brought another round of back-and-forth with shareholder and PayPal spinoff fan Carl Icahn.
EBay, which also sells e-commerce technology and services via its acquisition of GSI Commerce Inc., did say how much of its own money went into Snapdeal. Other investors in this round include Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital.
“The new investments in Snapdeal raises [eBay’s] holding in the Indian e-commerce marketplace, after making an initial investment in mid-2013,” eBay says in a blog posting. “The company chose to increase its investment in Snapdeal due to the company’s complementary business model, good management team and strong brand.”
EBay previously invested $50 million in Snapdeal, notes Colin Sebastian, an analyst with R.W. Baird Equity Research. “We believe Snapdeal's marketplace-oriented business model is complementary to eBay's business model and consistent with the company's strategy to grow aggressively in emerging markets.” Excluding autos, eBay says nearly 40% of the dollar volume of purchases on eBay’s marketplaces in 2013 came from outside the United States, according to the company’s latest financial report.
“EBay will continue operating its own Indian web site, although this deal could end up promoting Snapdeal's larger merchants on eBay's other sites,” Sebastian writes in a research note. “While eBay has a track record of following minority investments with outright acquisitions, we note there is a mix of approaches. For instance, the company operates two separate brands in Korea, and still maintains a minority stake in MercadoLibre in Latin America.”
MercadoLibre Inc., founded in 1999, operates eBay-like marketplaces in 13 countries that accounted for more than 15% of the region's e-commerce sales in 2012.
India’s Snapdeal launched in early 2010 and says it serves more than 20 million registered users. EBay says it had 128 million active registered users at the end of 2013. Active registered users are consumers who bid, bought, listed or sold an item on eBay in the past year.
Snapdeal also says it lists more than 4 million products from at least 6,000 brands. The India-based marketplace employs more than 1,000 workers. “Accelerating growth in India and other emerging markets continues to be a strategy for driving eBay’s global e-commerce leadership,” says eBay senior vice president Jay Lee. “EBay is excited about the prospects ahead for both Snapdeal and its own eBay India business.”
E-commerce spending in 2014 in India will increase 31.5% year over year, eMarketer projected earlier this year. That’s higher than the rates for other countries save for China (63.8%) and Indonesia (45.1%). Another recent report, from Forrester Research Inc., says that India’s online retail sales will grow from $2 billion in 2013 to $16 billion in 2018, increasing more than 50% a year.
The Forrester report notes that restrictions on foreign investment in e-commerce have kept major retailers like Amazon.com Inc. and Wal-Mart Stores Inc. from entering the market “with their standard online business models.”
Amazon.com Inc., No. 1 in the Internet Retailer 2013 Top 500 Guide, has an e-retail presence in India via an online marketplace there, whose launch last year followed the e-retailer’s debut in 2012 of the Junglee.com marketplace.
For eBay, the Snapdeal investment comes days after eBay announced its purchase of 3D computer graphics company PhiSix. Its technology virtually demonstrates how clothing fits a shopper’s body as she moves around, eBay says.
Not to be forgotten this week is eBay’s ongoing feud with Icahn, who owns at least 0.82% of eBay, which itself owns the PayPal online payment processing service. Ichan has recently derided eBay CEO John Donahoe and board members Marc Andreessen and Scott Cook for what he claims are negligent and self-interested moves that put the future of the company at risk. In conclusion, Icahn called for the separation of eBay and PayPal. Otherwise, he says PayPal will lose its place as a leading payments technology provider.
This week, Pierre Omidyar, eBay founder and board chairman, not only said that “PayPal and eBay are better together,” but lashed back in his own open letter. “Instead of having an honest discussion about a reasonable question, Mr. Icahn has chosen to attack the integrity of two highly respected and qualified board members [and Donahoe].”
In other eBay news this week, the company says it will work with the U.S. Commerce Department to promote U.S. exports and trade. “EBay is going to help publicize on its web sites the Department of Commerce’s programs to assist businesses exports,” says Richard Nash, eBay's head of government relations for the Americas. “The Department of Commerce will publicize on its web sites the opportunities eBay’s platforms present to small businesses.” EBay also will advise the Commerce Department about how to better serve smaller business, he says.